Should Oroco Resource Corp $OCO share holders be worried about the ban on open pit mining proposal?
$OCO $OCO.V $ORRCF
A 1.2 Billion assets selling for less than $65 M
https://www.mining.com/mexican-president-proposes-ban-on-open-pit-mining/
Mexican President Andrés Manuel López Obrador (AMLO) has proposed constitutional reforms to ban open-pit mining, citing severe environmental damage and excessive water use. The proposal, which does not cover underground mining. This move could affect the country's mining industry, as Mexico has 264 mines, many of which are open-pit operations. The proposal adds to the uncertain investment climate following a new mining law in May 2023 that introduced stricter regulations and reduced the tenure of mining concessions.
But does it affect OROCO? short answer… no
I think the contrary, its is good for OROCO. Why? Less supply, less competition. Increasing demand… a more asset.
*https://orocoresourcecorp.com/investors/presentations/
Understanding the Proposal
Firstly, it's crucial to understand that the proposed legislation does not outright ban open-pit mining, nor does it affect existing mining concessions. The language used in the proposal specifically refers to the "granting of open pit concessions," indicating a halt on the issuance of new concessions for open-pit mining rather than an imposition on current operations. This distinction is vital for stakeholders in the mining industry, as it means that existing concessions, along with their rights to progress to production, remain intact.
Legal and Political Context
The proposal is a constitutional amendment, which requires a two-thirds majority in the legislature to pass. Given the current political landscape, where President Andrés Manuel López Obrador's (AMLO) party does not hold the necessary supermajority, and with opposition parties unlikely to support the amendment, the likelihood of this proposal becoming law is slim. This context suggests that the proposal may be more of an election year gesture rather than a concrete policy shift.
Election Year Dynamics
With the federal election scheduled for June 2 and AMLO ineligible for re-election due to term limits, this proposal could be interpreted as a final attempt to make a political statement. Despite the proposal's unlikely passage into law, it serves as a platform for AMLO to vocalize his stance on environmental and mining issues.
At the same time just last week he was promoting mining activities in Sonora, a state known for its pro-mining stance, further indicating a more complex approach to mining policy than the proposal might suggest.
https://miningmexico.com/plan-sonora-tiene-mucho-futuro-amlo/
Conclusion
While the Mexican President's proposal to ban open-pit mining concessions has garnered attention, a detailed examination reveals that existing concessions are not at risk, and the proposal's passage into law is highly unlikely due to the current political dynamics. The mining industry, particularly in supportive states like Sonora and Sinaloa, can expect to continue operations and development without significant hindrance from this proposed amendment. As such, the proposal appears to be more of a political statement in an election year rather than a policy poised to effect change in the Mexican mining sector.
*https://orocoresourcecorp.com/investors/presentations/